Goldman Sachs, Matt Taibi’s famous vampire sucking squid wrapped around the face of humanity, decided to bless the world with its “most comprehensive gold primer ever.” Zero Hedge picked it up (only for Premium subscribers) and slapped on a headline that sums up the entire game:

“You can’t pump it… But you can bid it out of someone’s hands.”

That’s a perfect one-liner for the way gold pricing works. And if you don’t know the difference between a futures contract and a Krugerrand, don’t worry. Let me strip away the jargon and explain this in plain English.

Why You Can’t Pump Gold the Way You Pump Stocks

Wall Street loves “pump and dump” schemes. A few tweets, a CNBC cameo, maybe a breathless podcast about “the next AI revolution” — and boom, a stock shoots higher. Tesla, GameStop, crypto coins named after dogs — all ripe for hype.

Gold doesn’t play that game.

You can’t just whip out a marketing campaign and create more gold. There’s no corporate board issuing press releases about “next quarter’s guidance” for the yellow metal. And unlike stocks or crypto, you can’t invent more with a keystroke.

Credit: Goldman Sachs, via Zero Hedge

The gold supply grows slowly, painfully, and expensively — through blasting rocks, hauling dirt, refining ore, and pouring bars. Mining adds about 1.5–2% a year to the total above-ground stock. That’s it. No hype cycle, no CEO chatter, no dog coin frenzy.

But You Can Bid Gold Out of Someone’s Hands

Here’s where things get spicy. While you can’t conjure up gold, you can “force” someone else to sell it.

Imagine you and I are at an auction. There’s one shiny bar on the table. I bid $2,000. You bid $2,050. I want it more, so I bid $2,100. Eventually, one of us gives up, and the other walks away with the bar.

That’s the real gold market in action. If demand spikes — say, central banks hoard, or hedge funds panic, or retail investors decide they’d rather hold metal than dollars — the price climbs until the current owner says, “Fine, at that price I’ll sell.”

That’s what Goldman means: you can’t inflate supply, but you can keep bidding higher until someone surrenders their stash.

Where the Real Price Gets Made: London and New York

Gold trades everywhere — Shanghai, Zurich, Dubai, Mumbai. But when push comes to shove, London and New York set the global price…. For now.

Credit: Goldman Sachs via Zero Hedge

• London: Home of the LBMA (London Bullion Market Association). This is where massive physical trades settle. Think pallets of 400-ounce bars being shuffled between vaults.
  
  
• New York: The COMEX exchange. This is the futures market — paper gold contracts representing promises to deliver.

These two cities act like twin engines. London sets the tone for physical bullion; New York amplifies price moves through futures speculation.

That’s why when you hear “the gold price,” what you’re really hearing is a number born out of those two places. Everyone else — from Indian jewelers to Swiss refiners — takes their cues from those hubs.

The Physical Reality of Gold

Here’s the kicker: gold is a physical metal. We forget that sometimes, because we’re used to looking at glowing green numbers on a screen.

But behind every contract, every ETF, every “price per ounce,” there’s supposed to be real metal — bars sitting in vaults. When someone insists on delivery, the metal must be there.

This is why squeezes happen. If more buyers than sellers demand physical gold at the same time, vaults get drained. And once inventories look thin, buyers panic, bidding prices higher to secure what little is left.

In other words: shortages drive spikes.

The Goldman Takeaway: Demand Matters More Than Supply

Goldman’s primer says:

• Don’t overthink the mining supply. It grows at a snail’s pace.
  
  
• What matters is who wants gold right now and how badly.

If central banks (like China, Russia, or Poland lately) are vacuuming up gold, then supply gets squeezed. If hedge funds rotate out of bonds into gold as a safe haven, the same story applies.

It’s not about “new gold coming out of the ground.” It’s about existing holders getting persuaded — or forced — to part with their bars.

A Simple Analogy: Think Real Estate

If you’ve ever tried to buy a house in a hot market, you already understand the gold market.

Here’s a great bit of writing from the Goldman piece:

A useful analogy is the Manhattan real estate market. The total number of apartments is largely fixed, and the small amount of new construction each year is not what drives prices. What matters is the identity of the marginal buyer.

In Manhattan, there are two buyer groups: conviction buyers – those with deep pockets who will live there at any cost – and opportunistic buyers – those who will buy only at the right price and are content to live in Jersey or Brooklyn otherwise.

Assuming no construction/demolitions, when 100 apartments are bought, 100 have also been sold; the question is, who took the keys?

Conviction buyers set price direction: when they buy, prices rise and opportunists step back; when conviction buyers leave, opportunists step in.

In other words, opportunists provide a floor under prices on the way down and resistance on the way up.

Gold behaves the same way...

In gold’s world, the central bankers are the conviction buyers, and retail investors are the opportunists.

What This Means for You

Here’s where it gets practical.

1. Gold Isn’t a Meme. Don’t expect it to moonshot on hype. The fundamentals matter: who’s buying, who’s hoarding, who’s selling.
   
   
2. Squeezes Are Real. If too many buyers show up at once, price jumps are violent. That’s when you see gold gap $100 or $200 in days.
   
   
3. Physical Still Rules. ETFs, futures, and mining stocks are fine for making vast sums of money. But if you want to understand gold, think about vaults and bars.
   
   
4. Central Banks Are the Whales. When a big whale like the People’s Bank of China starts hoarding, they don’t care about paying $10 or $20 more per ounce. That sets the global tone.

Gold, Alone.

Gold is the anti-fiat. It doesn’t bend to hype, word of mouth, or Wall Street marketing departments. It doesn’t earn yield. It doesn’t innovate.

But it sits there, 24/7, refusing to go to zero. And when push comes to shove, it can only change hands if the buyer makes the seller an offer he can’t refuse.

That’s why gold drives the economists insane. They can print dollars by the trillion, conjure digital assets, inflate asset bubbles — but gold refuses to be pumped. It forces discipline: if you want it, you pay up.

Wrap Up

Goldman’s “most comprehensive primer” could have been boiled down to one rude truth:

You can’t inflate gold. You can only pry it from someone else’s grip.

And right now, with central banks hoarding and governments debasing currencies faster than you can say “QE Infinity,” you can bet those bids are only going higher. And just wait until retail realizes it’s missed the first 100-200% gains in the ETFs and mining stocks.

So if you’ve already got your bars, sit tight. If you don’t, well… be prepared to pay up.